Back to Basics ECFs Benefits Should Be Approached with Caution

Journal Issue

Feb 2006

Column Name

Consumer Corner

Citation

ABI Journal, Vol. XXV, No. 1, p. 14, February 2006

Topic Tags

Consumer Bankruptcy

Practice and Procedure

Journal HTML Content

While we begin to digest all of the new opinions
on the complicated and sometimes ambiguous provisions of the
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
(BAPCPA), it may also be a good time to recall one of the more mundane
and by now familiar practices in bankruptcy: case management and
electronic case files or CM/ECF. At this point, the vast majority of
bankruptcy courts in the country have converted to CM/ECF. Almost
every court that is CM/ECF operational also accepts electronic
filings.1 With the rollout of any new
program, as BAPCPA presently reminds us, there is a learning curve.
Clerks have many anecdotal stories, such as receiving a filing that
consisted of the Adobe Acrobat user manual—used for creating the
pdf document of the filing—in place of the actual filing.
Practitioners report having their user information misidentified and,
as a result, becoming the unfortunate recipient of hundreds of e-mails
for which they have little or no use. These and other inconveniences
must be viewed as tolerable and go with the territory when
implementing a new process. Further, the integration of a new process
is a good time to revisit old protocols. Practitioners who blindly
rely on technology or otherwise approach ECF cavalierly or with a lack
of diligence will be met with little sympathy. This article will review
some of the opinions where ECF has been part of the controversy and
that highlight how, while ECF has made the practice of law more
efficient, it has not allowed for any deviation from established
practice standards. Tough Transition Even though most of
the courts in the country have completely transitioned to CM/ECF,
there are still lingering issues. In Askew v.
Patel,2 the court’s administrative
procedures required all documents to be scanned and electronically
transmitted to the bankruptcy court. The court would take no action to
docket the filing, however, until a paper “hard” copy and
a receipt confirming that it had been electronically scanned were
delivered to the court. The court would then upload and docket the
filing. Accordingly, in this jurisdiction, a document was not
considered “filed” until such time as the hard copy was
delivered to the court. The plaintiff in this case uploaded the
adversary complaint to the court on the date of the filing deadline,
but did not file the paper copy until two days later. The court
dismissed the complaint, assuming there had been “excusable
neglect” but also finding that it was insufficient to extend the
deadline for the complaint under Bankruptcy Rule
4007.3 While the focus of the opinion was on
the ability of the court to extend a deadline to file a §523
complaint, the court gave little consideration to the timely
electronic filing. Reliance on Use of ECF Information The
landmark Comm. Bank v. Perkins,4 one of
the earliest cases involving ECF, focused on a party’s right to
rely on information contained in the electronic file. In this case,
after the bankruptcy court entered an order deferring the
debtor’s discharge, the clerk mistakenly established and published
on its Web site a second (later) bar date for filing §523 and
§727 complaints. A creditor, aware of the original deadline but
nevertheless relying on the new, incorrect bar date and conversations
with the trustee and bankruptcy clerk, filed its complaint by the
later deadline. The bankruptcy court dismissed the complaint on the
ground that it was late, ruling that there was no equitable reason for
an extension. The Bankruptcy Appellate Panel (BAP), in reversing the
bankruptcy court, stated: “Influencing our decision is the fact
that the federal court system is rapidly converting to electronic case
filing...and that parties need to be able to rely on information
contained in a bankruptcy court’s electronic case file,
including bar dates published by a bankruptcy court
clerk.”5 The dissent, however,
criticized the creditor’s reliance on both the clerk’s
electronic entry of the deadline and the advice of the trustee, who
also mistakenly advised the creditor that the deadline had been
extended. The dissent found that the creditor’s reliance on
these sources in the face of the established rules for extending a
complaint deadline was not reasonable. The dissent suggested that the
efficiency of ECF is to allow practitioners to review documents
easily, obviating the need for reliance upon conversations with and
opinions of court personnel or other officials. The Old Standards
Still Apply In the Catch-22 category, the debtor’s attorney
in In re Wenk6 was faced with the
dilemma of filing a petition at a client’s request without the
client’s signature in order to stop a
foreclosure.7 In an attempt to comply with
his client’s wishes, and fearing a malpractice suit, the
attorney electronically filed the petition without first obtaining the
debtor’s signature on the original. The attorney argued that the
only purpose of the debtor’s signature is to affirm the accuracy
of the information in the petition. Because the information was
correct, he argued that he did nothing wrong. Alternatively, the
attorney argued that it was not his intention to purport to have a
signed petition, but rather to file a deficient petition and correct
it later by an amendment.8 The court was
wholeheartedly unsympathetic to the attorney’s predicament. The
“/s/” on the electronic version of the petition represented
that the debtor had signed the original when she had not. This,
according to the court, amounted to fraud, the same as if the
debtor’s signature had been forged. In addition, contrary to the
attorney’s position, the court noted that the debtor’s
signature on the petition is essential, representing the
debtor’s oath that the information in the petition is accurate.
The fact that it may be accurate despite the missing debtor signature
was of no consequence. The court was likewise unimpressed with the
attorney’s alternate explanation that he intended to file a
“deficient” petition. First, a debtor’s signature is
required, even on a skeletal petition. More importantly, however, the
court found the practice of intentionally filing an unsigned petition to
obtain the benefit of the automatic stay during the cure period to be
a fraud on the court—a “ flagrant abuse of the bankruptcy
process.”9 The court was aware of the
difficult situation in which the attorney found himself. However, it
did not hold this to be cause enough to ignore his duty to the court
as an attorney. Finding the attorney’s actions improper under
Rule 9011, the court imposed sanctions. In a similar
case,10 after her first petition was
dismissed, a debtor told her attorney’s receptionist that she
was concerned about a possible foreclosure on her home. Another attorney
at the same firm was given the debtor’s file and decided,
without speaking to the debtor but believing it necessary, to file a
new petition for the debtor. The debtor did not sign the petition nor
authorize the attorney to file the petition. During the time that the
second case was pending, the debtor hired a new attorney, who filed a
third chapter 13 petition for the debtor. The chapter 13 trustee filed
a Rule 9011 motion against the attorney who filed the second case
without the debtor’s authorization. The court began by noting
that, “an attorney’s electronic filing of a petition
represents that the debtor signed the
petition.”11 The debtor’s
signature, according to the court, is not an authorization to file the
petition, but rather a verification under penalty of perjury that the
information in the petition is correct. Since the debtor did not sign
the petition, the attorney’s filing is unverified and violates
Rule 9011(b)(3). In a slightly different twist, in In re Terry
Brown,12 the debtor’s attorney
filed an amendment to a chapter 13 plan by typing “revised”
on the previous plan and making the changes requested by the trustee.
The attorney’s assistant opened the computer version of the
plan, made the same changes and filed it electronically. The
electronic plan impliedly contained the debtor’s signature;
however, the debtor never signed the hard copy of the revised plan
maintained by the attorney. The CM/ECF rules in the debtor’s
jurisdiction required ECF filers to retain documents bearing original
signatures for five years after a case is closed. The court noted
several problems faced by the attorney. First, the attorney altered
the “hard copy” of the original plan, and thus would be
unable to produce an accurate original. Second, because the attorney
merely altered a previous plan, the debtor’s signature on the
attorney’s hard copy pre-dated the new version. Third, because
the “signature date” on the electronically filed document
was the filing date, the revised plan filed with the court was not the
same as the attorney’s hard copy. The court stated: Here, by
electronically filing a document, the debtor’s attorney certified
that she had the document in question, bearing the debtor’s
original signature in her physical possession as required by the
court’s Interim Operating Order. Such is not the case for both
the fourth amended chapter 13 plan and the revised fourth amended
chapter 13 plan... The chapter 13 trustee is correct that the
integrity of the electronic filing system is at risk if attorneys are
careless in their handling of originals. In addition, attorneys must
treat the filing of electronic documents no differently than the
court’s prior system. At all times and for all documents filed
with the court, an original signature is required. The same public
policy that prevented an attorney from filing a document on a
client’s behalf without an original signature still exists in
the era of electronic filing.”13 The
debtor’s counsel was sanctioned by the court. Filing by
Midnight - A Procrastinator’s Best Friend? One of the
benefits of electronic filing for the deadline-challenged is the
ability to file a document up until midnight on the day it is due.
Waiting until the last minute, however, is not always failsafe. In

Mittman v. Casey,14 the issue was
whether a complaint, which the plaintiff attempted to file
electronically before midnight but which was not entered onto the
docket until after midnight, was timely filed. In ruling that it was
not, the court noted that its ECF rules required filings to be
completed before midnight, local time, on the day that they are due.
Although the attorney began the filing process by sending the cover
sheet prior to midnight, the court’s rules were clear:
“[W]hen a document has been filed through ECF, the official
record is the electronic recording of the document as stored by the
court, and the filing party is bound by the document as filed. Except
in the case of documents first filed conventionally, a document filed
through ECF is deemed filed at the date and time stated on the notice
of electronic filing from the court.”15
In this case, neither the cover sheet nor the complaint were docketed
until after midnight. The court’s ECF rule corresponded to the
conventional rule for filing. The court pointed out that had a cover
sheet been presented at the clerk’s counter before midnight,
with the adversary proceeding following after midnight, the filing
likewise would not have been considered timely, specifically noting
that cover sheets are not a part of, nor a substitute for, adversary
filings.Computer Use Required Now that computers, and
fluency with the Internet, should be an ordinary part of every
attorney’s office protocol, courts are expecting attorneys’
practices to evolve with the technology. In a pair of similar cases,
courts have sanctioned attorneys for failing to investigate
debtors’ previous filings by taking advantage of the
availability of PACER. In the first, during their initial meeting, the
attorney questioned the debtor about previous filings. The debtor
disclosed only one of eight previous filings, and the attorney listed
only that one in the petition. The attorney used PACER to search the
docket of that previous case, learning that an order in that case
barring refiling had expired. He made no further inquiry into PACER
records before filing the petition. However, because there was an
intervening Bar order in a different previous filing for the same
debtor, the new case was immediately dismissed. The attorney then
filed a new case on behalf of the debtor’s husband. These cases
operated to continually frustrate a creditor’s attempts to
foreclose on the debtors’ real property. The attorney
insisted that he had fulfilled his responsibility by questioning the
debtor about previous filings and was justified in relying on her
representations. The court was not unsympathetic to the plight of an
attorney when a client arrives facing immediate foreclosure. However,
“as a result of the advent of electronic documents, a few clicks
of the mouse enable an attorney to discover that client’s
bankruptcy history...I believe a PACER search should be done by every
lawyer prior to filing a petition with this
court.”16 The court went on to note
that a Bar order is usually entered only when there are more than two
previous filings, and the attorney’s failure to further
investigate the debtor’s bankruptcy history with knowledge of at
least one previous Bar order was inexcusable. In In re
Oliver,17 the debtor’s seventh case
was filed in violation of an order in a previous case barring refiling
for a period of 180 days. Again, the court refused to accept the
attorney’s contention that he was entitled to rely upon the
debtor’s representation regarding previous filings, stating:
“Given the ease with which a lawyer can search the court’s
records and the ‘epidemic’ of repeat bankruptcy filings,
the failure to conduct a PACER search may subject a lawyer to
sanctions.”18 The court seemed
particularly concerned with attorneys who would rather take a fee than
engage in any investigation that might result in turning away a
potential client. Lawyers should not be permitted to gain a
competitive advantage in the marketplace by lowering their ethical
standards. This court has observed time and again this process of
lawyer-shopping coupled with serial filing. The lawyer should be
something more than a mere scrivener for her client. A lawyer may not
take his client’s word concerning previous bankruptcy filings
when it is so easy to check the court’s records...the failure to
conduct such a search is not reasonable under almost any
circumstances.19 ECF is without
question a valuable and time-saving tool for attorneys. Instant access
to dockets and documents translates into better service to clients. As
these cases demonstrate, however, when used as a substitute for
reasonable and ethical conduct, courts have not hesitated to sanction
the offender. <blockquote> <blockquote>

</blockquote></blockquote><hr><h3>Footnotes</h3>1 For information on
the courts currently using CM/ECF and accepting electronic filings,
see www.uscourts.gov/cmecf/cmecf_about.html. 2 In re
Patel, 331 B.R. 497 (Bankr. M.D. Ga. 2005). 3 This case
is currently being appealed on the issue whether a deadline for filing
complaints under 11 U.S.C. 523 can be extended for excusable neglect.
 4 In re Perkins, 271 B.R. 607 (8th Cir. BAP 2002).
 5 Id. at 614. 6 296 B.R. 719 (Bankr. E.D. Va.
2002). 7 The debtor called the attorney requesting a petition be
filed, but could not get to the attorney’s office because of the
weather. The debtor, worrying that the petition might not be filed,
obtained the services of another attorney to file the petition,
resulting in duplicate filings for the same debtor. 8 The attorney
testified that it was his practice to file petitions without
signatures so that the debtor could receive the benefit of the automatic
stay immediately, knowing that the court would issue a deficiency
notice and provide a 10-day cure period. 9 269 B.R. at 726. 
10 Briggs v. LaBarge (In re Phillips), 317 B.R. 518
(8th Cir. BAP 2004). 11 Id. at 523. 12 328
B.R. 556 (Bankr. N.D. Cal. 2005). 13 Id. at 559.

14 In re Michael A. Casey, 329 B.R. 43 (Bankr. S.D. Ohio
2005). 15 Id. at 45 (emphasis in original). 16
Id. at 179. 17 323 B.R. 769 (Bankr. M.D. Ala. 2005).
 18 Id. at 773. 19 Id. at 774-775. Under
BAPCPA, the automatic stay is limited or does not go into effect for
certain repeat filings. See 11 U.S.C. 362(c)(3) and (4).
Affirmative action by the debtor will be necessary to obtain the benefit
of the stay, thus knowledge of the debtor’s previous bankruptcy
history becomes imperative.

Journal Authors

Alane A. Becket

Journal Date

Wednesday, February 1, 2006 - 12:00

Bankruptcy Rule

2006

none